Merkel Just Says "Nein"

Any hopes that Germany may bend and allow Greece a little leeway in its bailout negotiations, buying at least a little goodwill with its people have just been dashed. Not only that, but readers may recall last week's Die Zeit article that a third Greek bailout may be in the workd. Well, forget it. From Reuters:

The Greeks can do as they please, but if they expect Germany to fork over massive amounts of cash due to continual Hellenic incompetence the Germans quite rightly and rationally expect conditions to be met.

Pouring continual money into the black hole of Athens is not an option.

Yep, your dead on about it. Germany was hoping the vote would go the other way and so Greece can be blamed for the calamity instead of them when they leave the Euro and EU. Now Germany's hand is forced and they aren't giving them one red dime and not more time.

Crom Cruach or Cromm Crúaich (Classical Irish/Gaelic pronunciation /?k???m? ?k??u?ç/), also known as Cenn Cruach /?k??n?: ?k??u?x?/ or Cenncroithi /?k??n?: ?k??o???/, was a deity in pre-Christian Ireland, reputedly propitiated with human sacrifice, whose worship is said to have been ended by St. Patrick.

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In the old Irish tale from the Book of Lismore, "The Siege of Druim Damhgaire or KNOCKLONG" (Forbhais Droma Dámhgháire), Crom is associated with Moloch.

Crom (pronounced /?kr?m/) is a deity created by American author Robert E. Howard. He is mainly mentioned in swearing by his character Conan the Cimmerian, and "worshipped," it is presumed, by the bulk of the Cimmerian people. His name is probably derived from the ancient Celtic deity Crom Cruach, with the Cimmerians functioning as proto-Celts in Howard's pre-historic Hyboria.

No doubt that she will feel the pain but allowing someone who hasn't paid their bill in 5 years to keep borrowing isn't going to make that pain go away. The game is up. Time to face the real facts with real solutions. Time to turn on the lights assess the damage and start re-building.

What would her reaction be? Agree on more bailouts without any reform concessions? She's highly popular in Germany because she's balking. Way more popular than Obama or any other prominent western leader. If you have a look at the massive trade deficits expanding to new records especially in the UK, thanks to debt fuelled private and public consumption, the Germans have nothing to worry about. Their products are easily finding markets - now that the € is depressed even more so. The only ones that have time on their side are the Germans. I'll concede that they have lost quite a sizable export market chunk in €-Europe but have surprisingly more that made that up in non-European markets. Of all the large western economies, they are by far the healthiest. They will win this game of chicken if need be.

They might win, but only if Greeks, Spaniards, Irish etc. do not lift their heads from the sand and follow the Iceland's example. The Germans are betting that the lesser nations will not have the balls.

Schatzi, this game cannot be won anymore. Kicking the can down the road, accumulating even more Target 2 or ESM volumes will not do it forever. At some point the whole thing will blow up and bankrupt Germany. It is too late.

Merkel highly popular = high degree of uninformed/ naïve/ dumb people in Germany.

Merkel may be balking. More important is that she is paying and ruining her country.

I can't disagree. I'm here in Austria - quasi an economic satellite of Germany, net € and EU contributors, working into the late sixties, paying 50% income tax and watching Hollande make campaign promises his country cannot afford, but expects others i.e. Germany and other northern Europeans to pick up the tab. It makes me sick. Target2 exemplifies how broken the system is. A trillion € if I'm not mistaken. Absolutely crazy numbers. I still believe we can extricate ourselves from this mess. Start anew, maybe a small northern € based on Germany's economy with some small currency satellites like Luxembourg, Baltics, Netherlands and Austria or revert back to our original currencies. Tying in the periphery into the northern core was a massive mistake. Even France is not ready for a currency union. They're completely deluded and have just crossed the 100% debt/GDP threshold. I'd rather this mess end now in massive pain, then dragging this fiasco on till the point we are bled dry. At least Merkel is putting up some resistance, but it won't help anyway. European and US governments will keep insisting you need to make debt to grow out of debt. The grave is just getting dug deeper.

As you and Otto are on the ground over there, do either of you think it likely that your countries will finally get tired of this and go your own way, or will your governments cave after being hammered with intergenerational inherited guilt (bad, bad Teutons- you are all big meanies!)?

While some in the US may yell for never ending bailouts with funny money, I think the northern Europeans would also get significant support for saying no and it will probably break down along party lines over here. Whatever nonsense is in the average American head about Germans and Austrians from watching too much Hollywood propaganda, nobody questions their work ethic.

It's all very difficult to predict. Generally party lines are very pro €, as it's seen as the pro Europe line which coincides with the post-war new European approach of growing closer all for the benefit of mutual peace and reconciliation. The last war may be 80 years back, but politicians still tread lightly. It carries stigma to renounce the pro European idea. This isn't a United Sates of Europe and there is little solidarity with Greece nor the willingness to financially carry other countries for the greater good. When the own € is being taken from your pocket then that usually means the end of any feelings of solidarity. I think there is a tendency shift towards a more egotistical standpoint within the populace. If the politicians read that correctly and latch on to this new undercurrent, we may see a much more hard-line approach in politics.